A gene is considered a candidate gene for type 2 diabetes in Pima Indians if 1) it has a known physiological function in a pathway relevant to type 2 diabetes/obesity or 2) it is associated with diabetes/obesity in another human population or in an animal model. Candidate genes analyzed in the past year include: PPARg2, PGC-1, PLIN, IRS-1, IRS-2, FOXC2, and the insulin gene. Poymorphisms were identified in all of these genes and analyzed for association. For example, several novel polymorphisms were identified in the promoter region of PPARg2. One of the promoter SNPs that was positioned within a putative E2 box was associated insulin resistance, hepatic insulin sensitivity, and 24-hour lipid oxidation in non-diabetic Pima subjects. Functional studies in transfected 3T3-L1 cells demonstrated that this E2 box SNP is capable of altering transcriptional activity from a luciferase reporter construct. We propose that this novel promoter SNP, via its affect upon PPAR g2 expression, may have functional consequences on lipid metabolism independent of the well-characterized Pro12Ala substitution in PPARg2, and perhaps both of these SNPs contribute to PPAR g2-related phenotypes. Similarly, a Gly482Ser polymorphism within the coding region of the PGC-1 was recently reported to be associated with an increased risk of type II diabetes in a Danish population. Genotyping of DNA from 903 Pima Indians showed no association of Gly482Ser with type II diabetes; however, among the normal glucose tolerant subjects the Gly482Ser was significantly associated with glucose-stimulated insulin secretion, 24-hour lipid oxidation, subcutaneous adipocyte cell size, and plasma free fatty acids. We propose that the Gly482 allele causes a decrease in lipid oxidation, which then results in both an increase in adipocyte size as well as an increase in plasma free fatty acids. The increase in plasma free fatty acids then ultimately impairs insulin secretion via b-cell toxicity. This cascade of metabolic pertubations may underlie the increased risk for developing type II in some populations.